Finance
UK's Financial Services Compensation Scheme cuts 2025/2026 levy on sector
Published by Global Banking & Finance Review®
Posted on May 22, 2025
2 min readLast updated: January 23, 2026
Quick Summary
The FSCS announced a reduced levy of £356 million for 2025/2026, thanks to strong recoveries from failed firms, enhancing trust in the UK financial sector.
UK's FSCS Lowers 2025/2026 Levy for Financial Sector to £356 Million
LONDON (Reuters) -Britain's Financial Services Compensation Scheme said it would impose a lower than expected 356 million pounds ($478.04 million) levy on the sector for the 2025/2026 financial year, after a "strong year" in recovering cash from failed firms.
In a statement on Thursday, the FSCS - which protects customers of authorised financial services firms if they fail, or have stopped trading - said the total levy payable was 38 million pounds lower than it forecast in November.
"In 2024/25, we had another strong year of recoveries, recouping more than 56 million pounds from the estates of failed firms and relevant third parties. This led to higher opening balances carried forward from 2024/25 in certain classes," CEO Martyn Beauchamp said.
"These recoveries put money back into the financial services sector and to the customers who use it, helping tobuild trust and confidence in the sector," he added.
The FSCS expects to pay 332 million pounds in compensation to customers during 2025/26, 36 million pounds lower than previously forecast.
The scheme protects deposits held in banks, building societies and credit unions, investments, pensions, endowments, insurance and funeral plans.
($1 = 0.7447 pounds)
(Reporting By Sinead Cruise; Editing by Amanda Cooper)
Key Takeaways
- •FSCS reduces 2025/2026 levy to £356 million.
- •The levy is £38 million lower than forecasted.
- •Recoveries from failed firms exceeded £56 million.
- •332 million pounds expected in compensation payouts.
- •The scheme boosts trust in the financial sector.
Frequently Asked Questions about UK's Financial Services Compensation Scheme cuts 2025/2026 levy on sector
1What is the new levy amount imposed by the FSCS for 2025/2026?
The Financial Services Compensation Scheme will impose a levy of £356 million on the sector for the 2025/2026 financial year.
2How much lower is the new levy compared to previous expectations?
The total levy payable is £38 million lower than previously expected.
3What compensation amount does the FSCS expect to pay in 2025/2026?
The FSCS expects to pay £332 million in compensation to customers during the 2025/2026 financial year, which is £36 million lower than previously forecast.
4What does the FSCS protect?
The FSCS protects deposits held in banks, building societies, and credit unions, as well as investments, pensions, endowments, insurance, and funeral plans.
5How did the FSCS perform in terms of recoveries in 2024/25?
In 2024/25, the FSCS had a strong year of recoveries, recouping more than £56 million from the estates of failed firms and relevant third parties.
